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The Australian Health System

Australia has a mixed public–private health system. It combines:

  • Publicly funded services

  • Private healthcare services

  • Shared federal and state/territory responsibilities

  • Individual contributions through taxes, levies, insurance premiums, and out-of-pocket payments

 

 

Who Funds the System

Funding is shared between:

  • Australian Government (though Medicare, PBS subsidies, aged care, and national programs)

  • State and Territory governments (through public hospitals and community services)

  • Individuals — Medicare levy, private insurance premiums, and out-of-pocket costs

 

Depending on the service, funding responsibilities may overlap.

 

 

Medicare

Medicare can be considered to be Australia’s publicly funded health insurance scheme. It:

  • Provides rebates for eligible services

  • Supports access to GP, specialist, and diagnostic services

  • Subsidises many medicines, via the pharmaceutical benefits scheme (PBS)

 

It is important to highlight there are strict rules for each service and medicine with eligibility set out by the Australian Government.  This eligibility can be reviewed and changed.

 

Furthermore it is important to highlight that Medicare rules do not necessarily cover all services and hence an out-of-pocket cost may apply.  This out of pocket cost is often referred to as the 'gap payment.' 

 

 

Hospital System

Australia has both public and private hospitals.

 

Public hospitals

  • Funded mainly by states and territories

  • Hospital treatment for public patients is generally provided at no direct cost, however exceptions may occur

  • Waiting times, either as routine out patient or emergency care, may depend on clinical urgency

 

Private hospitals

  • Privately operated

  • Services provided by private hospitals are usually funded by a patients private insurance, with or without a patient co-payment.  That said, a patient without private insurance, can choose to completely self fund the hospital admission.

 

Private insurance does not replace Medicare. Access depends on clinical priority and system capacity.

 

 

Primary Care

Primary care is usually the first point of contact and includes:

  • General practitioners

  • Practice nurses

  • Community health services

  • Allied health professionals

 

General practice plays a central role in referrals and care coordination.

 

 

Pharmaceutical Benefits Scheme (PBS)

The Pharmaceutical Benefits Scheme (PBS) aims to reduce the cost of medicines through a subsidy scheme.  If a prescribed medication meets strict PBS criteria, its cost will be subsidised, significantly reducing the out of pocket cost.  With regards to the PBS:

  • This scheme subsidises many prescription medicines

  • The scheme often requires patient co-payments

  • The scheme includes a safety net arrangements once certain thresholds are reached, limiting additional out of pocket costs above that threshold

 

It would be important to note:

  • Not all medicines are listed on the PBS

  • There are strict rules with regards to each medication and these rules are defined by the Australian Government and are subject to regular review and change

 

 

How People Access Care

Common entry points may include:

  • General practice

  • Emergency departments

  • Specialist referral pathways

  • Community health services

  • Emergency Services

 

Of note, access depends on urgency, eligibility, location, and service availability.

 

 

Variation Across Australia

Access may vary by:

  • Metropolitan vs regional/rural location

  • Workforce availability

  • Local infrastructure

  • Local demand

 

 

What the System Does Not Guarantee

The Australian health system:

  • Does not guarantee immediate access to all services

  • Does not ensure bulk billing everywhere

  • Does not remove all out-of-pocket costs

  • Does not cover every health service

  • Is not a single unified organisation

 

Furthermore rules and funding arrangements change over time.

 

 

Who Makes Decisions

As has been alluded to, there are several different entities which integrate together to form the Australian Health System.   Medicare rules and PBS rules are often regulated and established by the Australian Government.  State health services primarily regulate state public hospitals.  Private providers establish their own rules and regulations for services provided. 

 

Please note this website does not determine access, eligibility, or entitlement.  For current information please refer to:

Official government sources prevail if there is any conflict of information with this website.

 

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Disclaimer

This page provides general educational information about how the Australian health system operates. It is not medical advice. Rules, funding arrangements, and eligibility criteria change over time. Clinical decisions are made by healthcare professionals. This website does not create a professional relationship or determine access or entitlement.

 

 

Last reviewed: February 2026

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